Proposed Merger to Create Fourth Largest Car Maker

Scheduled to make a decision on the proposed automobile mega-merger between Fiat Chrysler Automobiles (FCA) and Peugeot (PSA) on Wednesday, the European Commission launched an in-depth investigation into the deal. According to the official announcement, the Commission is concerned that the proposed transaction may reduce competition in the light commercial vehicle segment in several European markets. “Fiat Chrysler and Peugeot SA, with their large portfolio of brands and models, have a strong position in commercial vans in many European countries,” Commission Vice President Margrethe Vestager said. “We will carefully assess whether the proposed transaction would negatively affect competition in these markets and ensure that a healthy competitive landscape remains for all the individuals and businesses relying on commercial vans for their activities.”

If the deal were to go through, it would create the world’s fourth largest car manufacturer in terms of annual sales, trailing only Volkswagen, Toyota and the strategic alliance between Renault, Nissan and Mitsubishi Motors. Fiat Chrysler, the group behind popular brands such as Jeep, Dodge, Ram and Alfa Romeo, was the eighth largest automobile group in the world last year, selling 4.42 million vehicles in total. Adding Peugeot’s sales of 3.48 million cars, the newly formed company would leapfrog Honda, Ford, Hyundai and General Motors to become number four in the increasingly consolidated car industry.

Back in December, both companies had announced their binding agreement on a 50-50 merger of their businesses. “With its combined financial strength and skills, the merged entity will be particularly well placed to provide innovative, clean and sustainable mobility solutions,” the announcement of the deal read, adding that the merger would create €3.7 billion in annual run-rate synergies, mainly thanks to technology, product and platform-related savings as well as scale effects in purchasing.